Amstrad Case Study

Introduction

Amstrad Plc is a 100% subsidiary of BSkyB Plc. The company designs, develops and manufactures set top boxes for BSkyB and Sky Italia.

The company also used to design, develop and manufacture audio, telecoms and other consumer electronic products.

Reasons for Success

Amstrad will always have the benefit of being known as the first company to offer reasonably priced personal computers and also, later in its history, portable computers. This allowed Amstrad to establish itself as a cutting edge leader in the electronics market, a reputation from which it has benefited for the past four decades.

Furthermore, Amstrad was at the forefront of the fast moving development of the personal computer market that occurred throughout the 1980s and 1990s. Being one of the main names involved with this development has allowed Amstrad to be recognised as one of the most trusted and preferred brands, even when competitors entered the market.

Many electronic companies have a reasonably short lifecycle, resulting in a loss of faith in the industry, as a whole. Amstrad has bucked this trend by being in existence (and profitably so) for forty years. Far from being a 'one hit wonder', Amstrad has proved its staying power, thus ensuring a greater degree of customer trust in its products.

Internally, one of the main strengths that the organisation has had is that of a consistent leader. This has allowed the culture and style of the company to develop in a consistent manner, without constantly changing and competing management ideas. Although Sir Alan Sugar has now stood down as a result of the BSkyB takeover, the power of consistent management has already been enjoyed by Amstrad.

More recently, Amstrad has recognised and acted upon the need to form strategic alliances with cutting edge companies so that it can maintain its reputation of being at the forefront of technological developments. This pooling of knowledge and resources is vital for the long term health of the company, going forward.

Threats and Problems

Although the new alliance with BSkyB is a beneficial move for the company, there is a danger that there will be a clash of cultures, particularly with those employees who have worked under the direction of Sir Alan Sugar alone, for several decades.

Amstrad had first mover advantage in the personal computer market which, although advantageous in many ways, has nevertheless meant that Amstrad now has a reputation for being somewhat behind the times and outdated. As technology becomes more complicated, this reputation may prove difficult to overcome with certain potential customers.

Electronics, as a whole, are becoming increasingly competitive with more and more competitors entering the market. Pressures on costs will undoubtedly lead to a drop in profits for companies such as Amstrad. Efficiency and careful investment in terms of staff time and effort will become critically important, over the coming years.

The market is also moving rapidly, which requires a highly tuned sense of timing where new product launches are concerned. Amstrad will not be able to rely on its long standing, solid reputation; it will need to become innovative, if it is to retain impressive revenues as it has achieved, historically.